Changes in the French PPP and concession framework
F.BERGERE Secretary General French treasury PPP taskforce OECD Paris, 24 March 2011
French PPP market at crisis onset
PPP Act recent (2004), Progressive ramp-up, Able & willing professional actors pulling the market Very aggressive financing terms Legal framework in place and working; few litigations; => Overall compelling case for PPP on economic, political & legal grounds as a key tool in implementing infra projects
…But still an “emerging market”for big projects … 2
Financial crisis impact in 2009 -Reduced banking capacities -Club deals to replace the syndication market -Increased cost of funding -Reduced tenor -fewer active players on financial side, with an increased aversion to demand risk => Several big-ticket PPP projects hitting the market in2009/10 in danger of being deferred or abandoned 3
Pros & Cons of Public support to PPPs? PROS: Necessary to avoid projects falling in the liquidity trap Demultiply economic activity & jobs Idea= keep balance between public & private sectors’ responsibilities Limited immediate impact on budget outlays & deficit CONS: Contrary to spirit of PPP (transfer risk to private sector) Windfall opportunity for hard-to-finance deals (concessions) Issues like: LT budgetary sustainability, balance-sheet impact, compliance with State aid/competition EU rules
The French Economic stimulus package for 2009-2010 Public Investment = focus of Stimulus plan Public support to PPP financing: Main measures adopted in Feb 2009 1. 10bn€ State Guarantee scheme 2. 8 bn€ Co-funding from Caisse des dépôts- managed Fonds d’Epargne 3. Adjustable financing terms +Partial public funding of PPP projects now possible 5
State guarantee scheme • EUR 10 Bn State guarantee program for priority projects realised under PPP& concession scheme • Guarantee to be granted before end-2010
• Guarantee up to 80% of the private sector debt (commercial banks & EIB loans) financing required
• Guarantee priced according to normal market conditions (compliant w/ EU state aid regul.)6
Stimulus package results on PPPs:
To date 15 projects reviewed, and 7 projects granted eligibility to State guarantee, for an aggregate amount of approx. €4 billion, out of the 10bn maximum amount available: HSL-Tours-Bordeaux, Le Mans-Rennes, NimesMontpellier, CDG-X, Ecotaxe/HGV, MoD Balard premises, Tram-Train Réunion Only 2 projects would effectively need the Stat guarantee to achieve closing: Tours-Bordeaux & CDG-X, both concessions No financial closing yet, but enabled major projects (with up to 15bn€ cumul.investmt) to be pursued throughout the financial crisis => Clear signal about Gov’t commitment to pursuing the development of PPPs
Co-funding from CDC managed saving funds • EUR 8 Bn co-funding program over 5 years • Transportation infras and Renewable Energy : 7 Bn • Universities : 1 Bn
• Co-funding (< 25% of debt required) alongside public and private sector financing sources •Long tenors ( up to 40y) and favourable terms
• First examples : 20 projects identified for over 8 3 bn €) et 8 signed (Paris Universities,…)
Temporary measures : what next?
State guarantee already closed for new deals Adjustable financing also expired at end2010 CDC co-financing expiring by end-2013
But need for long-term financing of privately funded projects still there 9
Assessment of PPP - jan 2011 415 projects at all stages of procédure, incl. 84 projects attributed for a combined amount of 8.4bn€
